BT is to restart trials of a controversial internet advertising system that has outraged privacy campaigners.

Britain's biggest internet service provider said it would begin a new trial affecting thousands of customers starting today, despite the fact that two earlier secret experiments involving the technology prompted outcry and a police investigation

The system, known as Webwise, allows BT to potentially track and monitor every website that a customer visits, allowing it to build detailed behavioural profiles of web surfers based on their online activity.

Built by London-based advertising technology company Phorm, the system allows BT to insert its own highly targeted advertising onto web pages to earn extra money.

While traditional internet advertising systems allow the owners of individual websites to see who is visiting them, Phorm's systems have much wider scope because they run in partnership with internet service providers themselves.

This means that Webwise could have access to details of every website that customers visit, as well as every internet search they conduct and other personal information.

The latest experiment, which has been delayed since March because of public concerns and a series of police and government investigations, will affect up to 10,000 users over a four-week period.

As well worries over the potential abuse of such data, privacy campaigners were outraged when it emerged that two previous trials had been conducted without the consent of customers. They argued that it was illegal for BT to spy on users without their agreement, prompting a police investigation.

But last week City of London police announced that they had completed their investigation after finding no evidence of illegal activity, paving the way for the new trial to begin.

Similarly, a government investigation decided that Webwise did not breach European laws on data protection. However it did ask Phorm to allow web surfers "to exercise choice about whether to be involved".

But although the Information Commissioner, Britain's privacy watchdog, has also warned that the WebWise system would only be legal if it required users to opt in - rather than be applied to every single customer - the two companies said that it could potentially be used on every one of BT's 4.5 million broadband subscribers.

"Following successful completion of this trial and an appropriate period of analysis and planning, it is currently expected that Phorm's platform will be rolled out across BT's network," they said in a joint statement.

Promotional material on BT's website describes Webwise as a fraud prevention service, which uses its ability to track the web pages you visit to warn you if you are visiting a dubious or fake website. It is only after explaining this aspect of the system that the company mentions that it "also personalises the online advertising you see when browsing on participating websites by linking ads to your interests".

As well as its deal with BT, Phorm is in negotiations with other major broadband providers, including Virgin Media and the Carphone Warehouse's Talk Talk service – as well as some internet companies in the US.